Equity markets have been buoyed in recent sessions as a result of a generally calm geopolitical backdrop, but the rally does now appear to be running out of steam. This is perhaps no real surprise – markets are now nudging back into that inflated territory and there’s still the risk of one or more of the conflict hotspots escalating significantly, although the risk-on trade remains in favour – we have USD/JPY back above 103 and gold resolutely below $1300/oz. As such, regional markets have finished the day mixed, but the overall moves have been relatively limited despite that strong lead from Wall Street yesterday.
Futures are currently suggesting that we’ll see a softer start to the day’s trade on Wall Street and with little on the economic calendar, unless there’s a shift in geopolitical affairs then any real change here may seem somewhat unlikely. We do however have the FOMC meeting minutes due for release later in the day and there’s certainly going to be scope to pick through the detail here for further clues as to what the Fed is thinking. In the event that we see another dovish bias then equities could well find an excuse to move higher once again but for now we’re calling the DOW down 27 at 16893 and the S&P down 6 at 1976.